Basic, Inc. v. Levinson case brief summary
485 U.S. 224
SYNOPSIS: The court granted certiorari to review a judgment of the United States Court of Appeals for the Sixth Circuit and to resolve the split between the courts as to the materiality requirement of misleading statements under the Securities and Exchange Act of 1934, 15 U.S.C.S. § 78A et seq.
OVERVIEW: The Supreme Court granted certiorari to resolve a split among the courts of appeals as to the standard of materiality applicable to premerger discussions and to determine whether the courts properly imposed a presumption of reliance in certifying class members in an action alleging violations of § 10(b) of the Securities and Exchange Act, 15 U.S.C.S. § 78A et seq., and Securities and Exchange Commission Rule 10b-5, 17 C.F.R. § 240.10b-5 (1987).
HOLDING:
The Court held that an omitted fact was material if a reasonable shareholder would consider it important in making his or her vote and this standard should be applied to all § 10(b) and Rule 10b-5 actions.
ANALYSIS:
The Court also held that materiality required a case by case review of the facts and that a rebuttable presumption existed that stockholders relied on available information when buying or selling securities. The judgment of the court of appeals was accordingly reversed and remanded.
OUTCOME: The judgment of the court of appeals was vacated, and the case was remanded for further proceedings consistent with the Supreme Court's holdings that materiality was determined on a case by case factual basis and a rebuttable presumption of reliance existed regarding members of the class action.
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485 U.S. 224
SYNOPSIS: The court granted certiorari to review a judgment of the United States Court of Appeals for the Sixth Circuit and to resolve the split between the courts as to the materiality requirement of misleading statements under the Securities and Exchange Act of 1934, 15 U.S.C.S. § 78A et seq.
OVERVIEW: The Supreme Court granted certiorari to resolve a split among the courts of appeals as to the standard of materiality applicable to premerger discussions and to determine whether the courts properly imposed a presumption of reliance in certifying class members in an action alleging violations of § 10(b) of the Securities and Exchange Act, 15 U.S.C.S. § 78A et seq., and Securities and Exchange Commission Rule 10b-5, 17 C.F.R. § 240.10b-5 (1987).
HOLDING:
The Court held that an omitted fact was material if a reasonable shareholder would consider it important in making his or her vote and this standard should be applied to all § 10(b) and Rule 10b-5 actions.
ANALYSIS:
The Court also held that materiality required a case by case review of the facts and that a rebuttable presumption existed that stockholders relied on available information when buying or selling securities. The judgment of the court of appeals was accordingly reversed and remanded.
OUTCOME: The judgment of the court of appeals was vacated, and the case was remanded for further proceedings consistent with the Supreme Court's holdings that materiality was determined on a case by case factual basis and a rebuttable presumption of reliance existed regarding members of the class action.
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Interested in learning how to get the top grades in your law school classes? Want to learn how to study smarter than your competition? Interested in transferring to a high ranked school?
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